Wednesday, December 28, 2016

How do I calculate the fixed tax amount from the overall amount

How do I calculate the fixed tax amount from the overall amount

This was a task that came to me today. One of our colleagues wanted to calculate the tax payable to the government. 

Most businesses, especially when doing business in known circles are given only a rounded amount for services rendered or products purchased.

So, if the product is 1200 + taxes, the customer will only pay 1200 nett.

The onus is on the seller, to calculate the actual amount of tax payable.

Now, I wanted to find out what will be my tax amount, that is the amount I will have to pay the government as tax, from the 1200 i received from my customer.

The tax percentage is 28.75. I need to find out x, which will be the value I will retain and 1200 -x will be the tax amount payable.

My equation for the solution was this.

1200 =x + (x * 28.75/100)

I wanted a quick answer. My algebra was rusty due to years of disuse. It was then came to my rescue, with its algebra calculator that gave me the simplified equation.

Mathpapa Algebra Calculator

It is a simple algebra calculator, which enabled me to calculate the tax amount from the overall amount.

So, when I filled in the formula in the text box, the site calculated the formula and the value of x for me; which is 1200/1.2875

So, there you are!

Formula to calculate the fixed tax amount from the overall amount

Tax amt payable = Overall amount / 1.(Tax percentage x 100)

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